IIABCal Redefines Low Cost Auto Proposal

Bill to authorize the California Automobile Assigned Risk Plan to institute direct sales over the Internet for the California Low Cost Automobile Insurance program was stalled this week by IBA West.

AB 1024 was sponsored by Harvey Rosenfield's Consumer WatchDog organization. The bill would have directed CAARP to contract with a vendor to establish a web site that would be the official Internet web site for the direct sale of the low cost automobile insurance policy. Although low cost automobile insurance is not a major market for many IBA West members, AB 1024 would have established a bad precedent. If AB 1024 was enacted, a direct sales approach wherein the regulator would be in direct competition with its licensees would not be far behind for assigned risk automobile insurance through CAARP, fire insurance through the FAIR Plan, earthquake insurance through the California Earthquake Authority and workers' compensation insurance through the State Compensation Insurance Fund.

Amendments negotiated by IBA West with the Chairman of the Assembly Insurance Committee and the author of the bill changed the nature of this proposal. The bill, as amended in committee, now would only authorize CAARP to develop or hire a contractor to develop a web site that will: 1) match customers interested in the low cost automobile insurance policy with agents and brokers in their geographical area; and 2) randomly assign customers to licensed and certified producers when the customer wants to purchase the low cost policy via the Internet. As amended, AB 1024 passed the Assembly Insurance Committee 8 to 0.

"The turnaround in this bill is very good for producers," stated Erin Norwood, IBA West lobbyist. "We were able to alter this bill from a direct sales competitor to a bill that will pass Internet sales of the low cost automobile through certified producers and create an Internet platform at CAARP that will make it easier for producers to use this important program when needed.